That Darn Marvel Contract – What Rights Does Universal and Disney Own
- Updated: May 6, 2016
One of the most polarizing discussions in the theme park community is whenever rumors start up that a Marvel Comics-themed idea is coming to Universal Orlando or Walt Disney World. When The Walt Disney Company bought Marvel Comics in 2009 for $4 billion, it provided more headaches to the never-ending “Rights” debate. Like clockwork, fans go back and forth on which resort can use who, what, when, where, why, how, etc. and go through mental gymnastics as to why they are right.
Yet, no matter how many other blogs, or websites put out articles saying “Here’s the reality of the contract” – we end up right back at square 1.
When Universal Orlando announced the Incredible Hulk Coaster was going down in August, many fans (read: fanatical Disney fans) thought it was a sign that Universal was moving on with Marvel properties. The latest go-around was the rumor of a “Guardians of the Galaxy” overlay taking over Disney’s Hollywood Studios Tower of Terror.
So what exactly are the terms of the contract and what does it mean for the future of Disney and Universal Parks and Resorts?
“You have to know the past to understand the present.” – Carl Sagan
Here’s the gist:
In 1994, the Marvel Entertainment Group entered into a binding contract with Universal Orlando’s then-overlord, MCA, Inc. The contract allowed Universal Orlando to construct and maintain a “Marvel Universe” within their planned second gate (a.k.a the future Islands of Adventure). The contract remains in perpetuity, or indefinitely, unless Universal decides to close Marvel Super Hero Island, stop making payments for property usage, or Marvel opts out of the contract feeling their brand is suffering through Universal’s usage of the property.
The official excerpt from the agreement:
Once THE MARVEL UNIVERSE opens within the above time period, the term of this agreement shall continue for so long as a THE MARVEL UNIVERSE shall remain open (and operated consistent with the standards of the next paragraph below) at any Universal Theme Park (allowing for temporary closures for force majeure events or refurbishment/maintenance provided they are being diligently pursued), except for termination for material breach (with written notice and a reasonable opportunity to cure).
Each THE MARVEL UNIVERSE shall be operated and maintained in a first class manner consistent with the highest standards of the theme park industry and shall be deemed “open” only when operated in such manner (subject to temporary closures for force majeure events as described in the prior paragraph).
At such time as any THE MARVEL UNIVERSE is no longer open at a particular Universal Theme Park, all exclusivity and marketing rights acquired by MCA as a result of the opening of such THE MARVEL UNIVERSE at such Universal Theme Park, as set forth in Section IV below, shall terminate and this Agreement shall thereafter be construed as if the notice of intent to open THE MARVEL UNIVERSE had not been given by MCA.
After Disney’s purchase of Marvel in 2009, the contract did not become void; meaning all verbiage stated in the 1994 contract still takes precedent.
With the foundations of the contract now set and hopefully understood; what rights do Universal and Disney currently own?
The most important verbiage is that Universal owns the rights to Marvel “in perpetuity”; meaning for as long as the contract is in good standing. Either party may terminate the contract; however Marvel must have legit, legal reason to why the contract is void (poor upkeep, not upholding the quality of the IP, etc.)
Either party may terminate this agreement upon a material breach of the other party, subject to written notice and a reasonable opportunity to cure.
Although the parties may ultimately enter into a more formal agreement containing the above terms, until such occurs, the terms of this Agreement shall be binding on the parties.
Universal Orlando owns the rights to Marvel usage for all areas East of the Mississippi River for any property they are currently using. Per the contract:
East of The Mississippi – any other theme park is limited to using characters not currently being used by MCA at the time such other license is granted. [For purpose of this subsection and subsection iv, a character is “being used by MCA” if (x) it or another character of the same “family” (e.g., any member of THE FANTASTIC FOUR, THE AVENGERS or villains associated with a hero being used) is more than an incidental element of an attraction, is presented as a costumed character, or is more than an incidental element of the theming of a retail store or food facility;
Universal Orlando currently has 4 attractions in use based on properties from The Avengers, X-Men, Spider-Man, and Fantastic Four.
Due to this verbiage, Disney cannot install any attraction with these families for use in Orlando. The utilization of those 4 “families” includes a lot of characters in the Marvel Universe, specifically the “big ticket” characters – such as Wolverine, Spidey (obviously), and Iron Man. In addition, Universal Studios Japan features a Spider-Man ride clone, so Tokyo Disney cannot utilize Spider-Man.
Other than that – Disney is free to use Marvel in any Disney park they wish.
The big restriction is the usage of Marvel rides at Walt Disney World and the restriction of the Marvel name worldwide. According to the contract, no Marvel Action Universe attractions shall be located within 60 miles of Universal Orlando Resort/Marvel Super Hero Island.
iii. Any THE MARVEL UNIVERSE constructed hereunder after THE MARVEL UNIVERSE (Orlando) shall be subject to the payment and other relevant terms of this agreement applicable to THE MARVEL UNIVERSE (Orlando), except as to CPI increases as set forth herein.
iv. To the extent and in the territories that MCA has exclusive theme park rights, such shall not prohibit (except for the limitations described below) Marvel from itself developing or licensing its planned Retail concept which may include interactive elements as a major or minor element (presently intended to be called “The Marvel Action Universe” and referred to as such herein, but which may also be called “The Marvel Universe” or another name chosen by Marvel). The Marvel Action Universe will consist, inter alia, of the sale of comic books, trading cards, software, licensed or Marvel produced merchandise, the use of electronic games and/or pinballs or other coin operated games, and may include one or more virtual reality and/or simulator ride using Marvel characters or other themes. The following restrictions shall apply to The Marvel Action Universe (or elements thereof whether owned or licensed by Marvel).
Restrictions as to the geographic location of The Marvel Action Universe in areas where MCA has exclusive rights hereunder.
a. The Marvel Action Universe will not be within 60 miles of any Universal Theme Park with a THE MARVEL UNIVERSE
b. Mini-theme parks, recreation centers, game centers and the like designated with the Marvel name or the name of any Marvel characters or any major entertainment component of a Marvel Action Universe such as a motion based film ride shall not be within 60 miles of any Universal Theme Park with a THE MARVEL UNIVERSE.
iii. Within the ADI market of the city containing a Universal Theme Park (even to the extent such ADI exceeds a 60 mile radius) there shall not be a Marvel themed simulator ride.
a. Restrictions as to elements of The Marvel Action Universe in areas where MCA has exclusive rights hereunder.
b. The Marvel Action Universe will not be within any theme park, nor marketed in conjunction with any theme park. For purposes of these restrictions, an area of 10 acres or less will not be deemed a theme park. An area in excess of 10 acres may or may not be deemed a theme park based on its overall characteristics.
c. No The Marvel Action Universe will be marketed so as to infer or imply that such THE MARVEL ACTION UNIVERSE or one of its components (x) constitutes a theme park or (y) is a component of a theme park.
iii. No The Marvel Action Universe shall be in or marketed in conjunction with any themed entertainment areas owned, operated or marketed by Disney, Time-Warner, Six Flags, Sony, Paramount or Busch. As used herein, “theme park” and “themed entertainment areas” shall not include, inter alia, facilities or complexes where at least 70% of the revenues generated on the premises are derived from retail sales or whose primary source of revenue is lodging (which may include food, beverage and gaming revenues).
That pretty much puts a stranglehold on any attraction based on a Marvel property coming to Walt Disney World.
“But what about Guardians of the Galaxy movie preview? Or Star Lord meet and greet? What about the Avengers monorail?” you ask.
Well, we believe Disney was testing the legal waters on what they could get away with. The Avengers monorail and movie preview seem to fall into a category of movie advertising, not an attraction. Remember that the Guardians preview at Disney’s Hollywood Studios did not feature any additional effects like the preview at Disneyland. As for the Star Lord character walk around Disney was probably testing the waters a little more liberally. The Star Lord character was a hired third party, the words “Marvel” were not used, and most importantly it was a closed, one night only party. Furthermore, the characters were not advertised to appear. In addition, Universal could very well have privately sent Disney a warning about the use of the character as no further testing has occurred.
“But there is a Guardians of the Galaxy clip featured in the Great Movie Ride.”
The agreement states that a Marvel-based attraction cannot be featured in a theme park. The Great Movie Ride is not a “Marvel Attraction” nor is it a representation of the Marvel brand. It is, by all intents and purposes, an “attraction that just so happens to feature a clip from Disney/Marvel Studios”. So while Disney may have the right to the Guardians of the Galaxy characters in certain uses, verbiage in the contract clearly restricts them from a larger presence that many Disney fans were hoping for.
“What about Disneyland?”
Here’s where things get sticky. Per the contract Disney cannot create virtual reality or simulator rides as part of the Action Universe. Now lets go to Section 10 to 12:
West of The Mississippi – any other theme park may use any Marvel characters whether or not used by MCA.
iii. East or West of The Mississippi – permitted uses shall be limited to the use of specific Marvel characters and Marvel may not permit a licensee to use the name “Marvel” as part of the attraction name or marketing.
iv. East or West of The Mississippi – The foregoing permitted uses will be subject to the following marketing restrictions:
If the particular character is used by MCA (as defined above), such character will not be advertised or promoted East of The Mississippi, except by means of national Network buysof television, within printed materials such as brochures, or by print advertisements in periodicals directed to readers more than 300 miles from Orlando; and with regard to any of the foregoing permitted marketing, if the marketing is for a group of theme parks located both East and West of The Mississippi, the marketing shall make abundantly clear that the character only appears in the parks West of The Mississippi and shall not be subject to confusion on such point (such as would occur by visual inclusion of the character in a generic, multipark advertisement subject to a small print explanation of the parks where the character is present).
(b)If the particular character is not used by MCA, such character will not be advertised or promoted by means of (x) spot television buys, billboards, personal appearances, or print advertisements which are (y) viewed, located or primarily directed to persons within 300 miles of Orlando. In other words, regional (i.e. covering a multi-state geographic region) or national television or print media buys, or brochures would not be prohibited within such 300 mile radius.
Here it’s noted that characters can be used by other parks, not as an “Action Universe”, but have limited advertising opportunities. Marvel also cannot permit the use of the name Marvel as part of an attraction or marketing, this is why at Disneyland Super Hero HQ is the name for the meet and greet and it’s the Super Heroes Half Marathon Weekend.
Finally, when it comes to the future of Universal Orlando, they have the right to change and/or update Marvel Super Hero Island as long as it is “reasonable”:
i. Marvel will reasonably cooperate in making information, artwork, archive material, key personnel, etc. available to MCA in order that MCA can creatively develop THE MARVEL UNIVERSE and exploit its rights hereunder. MCA will reimburse Marvel for its reasonable costs in this regard, including time of non-executive personnel and their reasonable travel expense.
ii. Whenever Marvel has “reasonable” rights for rejection of approval hereunder, the basic criteria to be used by Marvel may include inconsistency with (i) basic story line, (ii) the powers, (iii) basic personality traits, (iv) physical appearance (including clothing or costume), and/or (v) living habitat or environment relating to such character as portrayed in Marvel’s exploitation of such character in comic books or other products for the particular time period being depicted by MCA.
iii. MCA shall take appropriate action, as directed by Marvel to protect all copyrights and trademarks in connection with the uses granted hereunder, including in-park uses, merchandise and packaging.
In Layman’s terms, Marvel/Disney has to comply with any reasonable changes, upgrades, or additions unless Universal intends to create a notably inferior product; or misrepresent the characters’ story, powers, appearance, and other basics (sorry those wanting to see a purple Spider-man who can shoot lasers out of his eyes and is actually a villain now too).
For example, many have speculated that Universal is looking to upgrade their very 90’s looking Marvel Super Hero Island to reflect the modern look of the characters. By the letter of the law (or contract), Disney cannot deny Universal unless they can prove it’s bad for Marvel’s business and/or a poor representation of the product.
Many have suggested Disney and Universal could enter into an agreement allowing certain rights to be used. If there is a silver-lining for those wanting to see Marvel used in Walt Disney World, the contract has been amended twice. Once in 1995 with regards to payment and fees; the other shortly after the Walt Disney Company purchased Marvel. That amendment protects Universal from allowing Disney free access to certain information and financial documents.
Having said that, Universal has no reason to relinquish any rights for these properties, especially considering the amount of success it brings. Giving Disney any rights to the Marvel name and its characters for use at Walt Disney World could arguably weaken Universal Orlando Resort’s brand by diluting its offerings. In addition, both Disney and Universal have stated several times there are no plans or desires to enter into any agreement allowing use of Marvel name and characters at Walt Disney World. Now that’s not to say an agreement can be reached in the future, but it is a highly unlikely scenario; but if a change were to be made, any amendment would be made publicly available online at sec.gov.
So where does this leave us? Universal Orlando Resort has exclusive rights to use any Marvel property within 60 miles of the resort. Any characters featured in Marvel Superhero Island, and characters associated with those characters’ “families”, cannot be used east of the Mississippi as an attraction in the United States. Changes made to Marvel Superhero Island must be approved by Marvel, who cannot veto any “reasonable” changes. Finally, Universal owns the exclusive rights for the use of the Marvel name and characters in perpetuity.